Kevin Blumberg knows the key to success when running a small Internet provider is to move data packets as fast as possible.

That’s why The Wire, the small ISP Blumberg is chief technology officer for, calls Toronto’s 151 Front St. home. In the downtown core of Canada’s largest city, it is a premier telecommunications hub that is carrier neutral and serves as a shared connection point for members of the Toronto Internet Exchange (TorIX). About 25 per cent of The Wire’s total traffic can run over the exchange, facilitated by hard-wired connections in the building.

“It’s a significant cost savings to us,” Blumberg explains. “Also, our traffic is flowing directly between peers. It’s not going from Toronto to Chicago to come back to Toronto.”

The Wire joined TorIX in October 2005 and has watched the number of connection sharing peers on the exchange grow to more than 120 members. Internet exchanges exist in major cities around the world and allow for members to “peer” their networks, which results in a direct flow of traffic back and forth between the peers. By setting up central exchange locations, members of the exchange can use one hard-wired connection to peer with many other networks.

The more direct connections result in fewer hops between point A and point B for data packets navigating the Internet. That results in less latency, or the lower ping times coveted by online gamers.

“Low ping, fast kill,” says Jon Nistor, president of TorIX. “Your latency on the Internet is lower when you access a site that is lower.”

Germany, Amsterdam, and London are the sites of the largest Internet exchanges in the world, he says.

A video created by the European Internet Exchange Association explains how Internet exchanges work.

In Canada, aside from TorIX, there are exchanges in Ottawa, Montreal and Vancouver. The Alberta Cyberinfrastructure for Innovation (or Cybera) has recently launched an Internet exchange point in Canada. It has installed a transit exchange in Calgary, and also has peered with the Seattle Internet Exchange – a connection point that counts Google, Amazon, and Microsoft among its members.

Cybera also offers its members access to supercomputers and access to the high-speed Optical Regional Area Network used for academic research, also called the Alberta Supernet in the province. For businesses with less than 100 employees, they can become a member of Cybera for $1,000 per year.

“That reduces the buy that you need from commercial Internet service and gives you great streaming performance,” says Robin Winsor, the president of Cybera. “Maybe it’s protein-folding research, maybe it’s undergrads looking at the latest viral video of a puppy making toast. Traffic is traffic and it has to move.”

Because of the Internet’s architecture, traffic can sometimes take more hops than is necessary to reach its final destination if directed to public networks. That was fine when the Web was catering mostly text and low-res images, but now it is relied upon for realtime voice-services and video streaming that require fast response times.

“If you’re going to rely on that for education needs or running your business, that’s going to be a problem,” Winsor says.

Business incubator sites across Alberta will provide the physical connection needed to tap into Cybera’s exchange. Its membership is small at the moment, as the organization has just recently begun expanding beyond academia and into the private sector. Current members include MoboVivo, a mobile video content provider, and OpenBSD, a free Unix-based operating system with a focus on security.

The Wire pays $1,200 per month to be a TorIX member, Blumberg says. But he estimates the business saves thousands of dollars a month in bandwidth costs by using the exchange.

“Any company that is a content provider that is managing their own network is primed for doing peering,” he says. “All you’re doing is getting yourself closer and cutting costs. There’s no real downside.” Peers on TorIX can either choose to be open and peer with any other member that wants too, or choose to be private and only peer with the members of their choice. The Wire is open to peering, while members like Eastlink Limited are conditional on peering. Other members of the exchange include the Canadian Broadcasting Corp., Rogers Communications Inc., and Wind Mobile.

“As a smaller provider, I don’t need to worry about running 50 different connections,” Blumberg says. “I can connect through one connection and exchange with 50 different people.”

ISPs become exchange members to avoid charges on bandwidth use of public networks, content providers to get better streaming performance, and financial institutions become members to get the lowest latency possible for transactions to be made. While most small businesses won’t need a membership with TorIX or Cybera, they might want to choose an ISP that does have one, Nistor says.

“Traffic growth is exponential in Canada,” he says. “If you’re a small business looking to get an Internet connection, choosing someone on TorIX is better.”

Bell Canada isn’t a member of the exchange, for example. So if Bell acts as your ISP, your traffic could be routed to Chicago and back to Toronto, taking unnecessary hops instead of staying local. But if you use The Wire as your ISP, your traffic will be exchanged locally more often.

As Blumberg knows, that helps move those data packets as fast as possible.